Tuesday, August 19, 2008

Inventor sues California

Inventor Gilbert P. Hyatt received a jury award of more than $388 million after suing California's Franchise Tax Board for its conduct in auditing him more than a decade ago.

The Nevada jury awarded Hyatt with damages based on torts committed by the FTB while auditing Hyatt in 1991 and 1992, when he received substantial sums of money for licensing his more than 70 patents.

The jury returned a unanimous liability and compensatory damage verdict on Aug. 6, 2008, of more than $138 million for fraud, intentional infliction of emotional distress, abuse of process, breach of confidential relationship, and invasion of privacy.

On August 12, the jury unanimously determined that the FTB's conduct warranted punitive damages. On August 14, the jury rendered its verdict assessing $250 million in punitive damages against the FTB. The FTB is expected to appeal the verdict.

The lawsuit has been progressing for more than 10 years. Hyatt, who received a microprocessor patent in 1990, sued California's tax assessment and collection agency, alleging the agency audited him in bad faith and committed fraud and other intentional torts during its audit. The FTB claimed he was a California resident in 1991 and part of 1992, assessing him millions of dollars in income taxes for those years, including fraud penalties.

After the case was filed in Nevada in 1998, California took the case to the Nevada Supreme Court and then to the U.S. Supreme Court, arguing that Nevada courts could not adjudicate Hyatt's claims against the California FTB in Nevada. The U.S. Supreme Court disagreed and unanimously upheld the Nevada Supreme Court's ruling that Hyatt's intentional tort claims could proceed to trial in Nevada.

"The entire case -- from start to finish -- is unprecedented," said Mark A. Hutchison, a founding partner of Hutchison & Steffen and lead counsel for Hyatt. He worked with Peter Bernhard of the law firm Bullivant Houser Bailey and Don Kula of Perkins Coie on the case.